is 4.00 percent, calculate the expected difference in percent in marginal revenue Problems: Answer all problems. All your work including the complete formula must be shown where appropriate. (80 points)

1. As part of a promotion a bank would like to raise up to $200 million in new deposits. It expects to offer interest rates as follows to depositors:

Expected volume of new deposits ($millions)

$50

$100

$200

Rate of interest offered on new funds (%)

1.00 percent

2.00 percent

3.00 percent

(a) If the marginal revenue rate on all deposits and marginal cost at each level of volume of deposits. (25 points)

(b) Calculate the total cumulative dollar profit the bank will generate at each of the level of volume of deposits (8 points)

(c) What volume of deposits should the institution try to attract to ensure that it achieves the highest cumulative profit? (2 points)